According to the Insurance Research Council, New Mexico has the 4th highest rate of uninsured motorists out of all of the 50 states. 21.6% of all drivers in New Mexico do not have any liability insurance even though it is required by the law. This can be very frustrating to someone injured by an uninsured driver. Fortunately, New Mexico has very strong uninsured motorist insurance protections that help protect victims involved in wrecks with uninsured or underinsured motorists. The following is a guide to answer some of the basic questions about the uninsured motorist laws in New Mexico.
What is UM/UIM?
Uninsured/Underinsured Motorist insurance sometimes called UM/UIM insurance is required in the State of New Mexico. Uninsured motorist protection applies if the at fault driver has no liability insurance. Underinsured motorist protection applies if the at fault driver does not have enough liability insurance to cover all of the damages suffered by the other driver(s). UM/UIM coverage provides for payment of property damage up to the UM/UIM property damage limits. UM/UIM bodily injury coverage provides for payment for medical bills and prescriptions, future medical bills, lost wages, pain and suffering and mental anguish up to the UM/UIM bodily injury policy limits.
New Mexico UM/UIM Statute
The UM/UIM statute is found at New Mexico Statute Annotated (NMSA) 66-5-301 and provides that UM/UIM coverage is mandatory in New Mexico. NMSA 66-5-215 provides that the minimum amount of coverage for bodily injury coverage is $25,000 per person and $50,000 per accident. The minimum amount of coverage for property damage is $10,000 per accident. New Mexico allows insureds to buy more than the minimum limits of UM/UIM. We recommend that you buy as much UM/UIM insurance as you can afford given the high rate of uninsured motorists in New Mexico.
The UM/UIM bodily injury “per person” limit means that the insurance company only has to pay up to the per person limits for any one person involved in the accident. The “per accident” limit means that the insurance company is only required to pay the “per accident” limits no matter how many persons are in the accident. For example, if the minimum UM/UIM limits are in place, and there are 3 people involved in the accident, then any one person could potentially recover up to $25,000 but the 3 people together could only recover a total of $50,000 in the accident.
UM/UIM coverage in New Mexico is known as reduction coverage. What this means is that UM/UIM insurance will be credited for any liability insurance that is purchased by the at fault driver and the UM/UIM driver’s coverage will be reduced by the amount of the at fault driver’s liability coverage.
For instance, if a driver has no insurance, then there is no reduction of the UM/UIM policy. In that case, the UM/UIM insurer will be required to pay for all of their insured’s damages up to the UM/UIM policy limits. If the at fault driver purchased $25,000 in liability insurance, then the UM/UIM insurer will be reduced by $25,000. So, if the injured party has $100,000 in UM/UIM bodily injury coverage, then there is $75,000 in UM/UIM coverage as shown in the following examples:
$100,000 UM/UIM – $25,000 (credit for at fault driver’s liability policy) = $75,000 UM/UIM available.
$75,000 UM/UIM – $25,000 (credit for at fault driver’s liability policy) = $50,000 UM/UIM available.
$50,000 UM/UIM – $25,000 (credit for at fault driver’s liability policy) = $25,000 UM/UIM available.
$25,000 UM/UIM – $25,000 (credit for at fault driver’s liability policy) = $0 UM/UIM available.
Rejection of Coverage
Because UM/UIM is mandatory, New Mexico has very strict laws on rejection of coverage. In 2010, a pair of cases were decided that drastically limited the right of automobile insurance companies to allow insureds to reject UM/UIM coverage.
The first case is Jordan v. Allstate Insurance Co., 245 P.3d 1214 (N.M.2010). The New Mexico Supreme Court gave guidance on the requirements for valid offers and rejections of UM/UIM coverage. The court held that a rejection of UM/UIM coverage must be made in writing and must be made a part of the insurance policy that is delivered to the insured. In addition, automobile insurance companies must provide their insureds with the premium charges corresponding to each available option for UM/UIM coverage. If the insurer does not get a valid rejection, then the insurer must provide UM/UIM coverage equal to the liability policy limits.
In the second case, ProgressiveNorthwestern Insurance Co. v. Weed Warrior Services, 245 P.3d 1209 (N.M.2010), the New Mexico Supreme Court required automobile insurance companies to offerUM/UIM coverage in an amount equal to the liability limits of the policy. Offering the insured a choice to purchase any lower coverage was the same as a rejection of that maximum amount of coverage. Therefore, the Court held that an insurance company cannot exclude the maximum level of UM/UIM coverage in an auto policy unless it has offered the maximum to the insured and the insured has rejected the coverage. For example, if an insured buys $100,000in liability coverage, then the insurance company must offer the insured $100,000 in UM/UIM coverage.
New Mexico Allows Stacking of UM/UIM Insurance
New Mexico allows stacking of insurance coverage policies. Stacking simply means that the insured can combine the UM/UIM limits for the various vehicles that are on the policy. For instance, if you have three cars that premiums are paid on under the same insurance policy and you carry minimum policy limits of $25,000 UM/UIM on your three vehicles, then if you are involved in a car accident there is $75,000 (3 vehicles x $25,000 = $75,000). As one can see, stacking significantly helps a person injured in a car accident because of the increased UM/UIM policy limits available.
Stacking applies to all of the named insureds on the policy. In New Mexico, stacking of UM/UIM is available on each policyin the household and all cars in the household. Stacking also applies to others depending on the relationship with the insured. New Mexico has created 2 classes of insureds known as Class 1 and Class 2 insured for purposes of determining stacking rules.
Class 1 insured include the named insured on the policy, spouse, and relatives of the insured that reside in the household. Class 1 insureds can stack all UM/UIM policies purchased by the named insured for all cars insured.
Class 2 insureds include all people that are present in the insured’s vehicle at the time of the crash that aren’t family or household relatives (for example, a friend riding in the insured’s vehicle). Class 2 insureds can only recover the UM/UIM policy limits for the vehicle involved in the crash.
S. Clark Harmonson of the Harmonson Law Firm wrote this article. Clark has been licensed to practice in New Mexico since 2007 and has represented numerous people who have been involved in accidents with uninsured and underinsured motorists in New Mexico. If you have a question for Clark about an accident involving you or a loved one, please feel free to call Clark at (915) 228-4140. We represent injury victims throughout New Mexico.